Why Netflix isn't scared of President Trump

On Saturday, Netflix CEO Reed Hastings wrote on Facebook that President Trump’s actions were “hurting Netflix employees around the world, and are so un-American it pains us all.”

It was a strong statement, especially compared to many other tech CEOs who came out against Trump’s immigration ban, but were more measured in the wording of their criticisms.

Here’s the rest of Hastings’ statement:

“Worse, these actions will make America less safe (through hatred and loss of allies) rather than more safe. A very sad week, and more to come with the lives of over 600,000 Dreamers here in a America under imminent threat. It is time to link arms together to protect American values of freedom and opportunity.”

This isn’t the first time Hastings has lambasted Trump.

In June, during the campaign, Hastings said that “Trump would destroy much of what is great about America,” if he were elected president.

For the CEO of a public company, it can sometimes be hard to reconcile a moral position with a duty to shareholders, but one reason Hastings likely feels free to speak his mind about Trump is that Netflix, as a company, thinks it’s immune to the Trump administration on one very important issue: net neutrality.

Too big to matter

Net neutrality is the idea of having a free and open internet, in which no website’s data is favoured over another’s. Practically, this means that internet service providers (ISPs) can’t charge a site like Netflix a fee to make sure its data runs at a speed that makes streaming video possible.

Under the new Trump administration, the FCC is widely expected to roll back net neutrality laws. At one time, this would have been seen a huge blow for Netflix, since it could open the company up to paying big fees.

That’s still possible, but in Netflix’s last quarterly earnings letter, it told shareholders not to worry.

“Weakening of US net neutrality laws, should that occur, is unlikely to materially affect our domestic margins or service quality because we are now popular enough with consumers to keep our relationships with ISPs stable,” Netflix wrote.

Netflix’s position is that it is simply too popular, and too large, to be hurt by a weakening of net neutrality rules. That type of change could actually favour the established players in the market, and Netflix now considers itself one of them. It would make it harder for upstart streaming services, which compete with Netflix, to get off the ground.

Still, Netflix is against such a policy change, precisely because the company thinks it is anti-competitive. (It could also hurt Netflix’s margins).

“On a public policy basis, however, strong net neutrality is important to support innovation and smaller firms,” Netflix wrote. “No one wants ISPs to decide what new and potentially disruptive services can operate over their networks, or to favour one service over another. We hope the new US administration and Congress will recognise that keeping the network neutral drives job growth and innovation.”

If Netflix felt more vulnerable to a change in FCC policy regarding net neutrality, Hastings’ strong opposition to Trump might be a trickier business proposition. But since Netflix’s public position is that such a change won’t affect its business, Hastings likely feels that staying cordial to Trump isn’t vital for Netflix’s future.

The FCC once could have been used as a big stick against Netflix, but it’s too late now, and Netflix is too dominant.

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